Raphael Stevens

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    SEC eyes tighter disclosure deadlines for hedge funds building big stakes in companies

    The SEC is considering changing the rules under which hedge funds disclose that they have acquired 5% of a public company’s stock.
    “I would anticipate we’d have something on that,” said SEC Chairman Gary Gensler because the current rule allows a 10-day buying period during which the public doesn’t know there’s a big player buying up shares.
    Gensler made the hedge fund disclosure comments during a virtual Q&A at the Exchequer Club in Washington, D.C.

    Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), speaks during a Senate Banking, Housing and Urban Affairs Committee hearing in Washington, D.C., U.S., on Tuesday, Sept. 14, 2021.
    Bill Clark | Bloomberg | Getty Images

    Securities and Exchange Commission Chairman Gary Gensler said Wednesday that the regulator is eyeing tighter disclosure deadlines for hedge funds building sizable stakes in companies.
    The agency is considering changing the rules under which hedge funds disclose that they have acquired 5% of a public company’s stock, Gensler said during a virtual Q&A at the Exchequer Club in Washington, D.C..

    The so-called Schedule 13-D filing is currently set at 10 days, which gives hedge funds more than a week to keep buying in secret.
    “I would anticipate we’d have something on that,” Gensler said, adding that he is worried about “information asymmetry,” because the public doesn’t know there’s a big player buying up shares during the 10-day period.
    “Right now, if you’ve crossed the 5% threshold on day one, and you have 10 days to file, that activist might in that period of time, just go up from five to 6% or they might go from five to 15%, but there’s nine days that the selling shareholders in the public don’t know that information,” Gensler said.
    The 13D disclosure rule was passed in the 1960s to protect corporate management by informing them of activities from activist shareholders and corporate raiders. In other words, big investors wouldn’t be able to accumulate big stakes in secret to take over a company without giving it a chance to defend itself.
    Critics of the rule have claimed that the 10-day deadline is already too tight and that hedge fund managers have a tougher time making a profit if they must reveal their strategies to the public so soon.
    “It’s material nonpublic information that there’s an activist acquiring stock, who has an intent to influence and generally speaking, there’s a pop if you look at the economics from the day they announced … there’s usually a pop in the stock at least single-digit percent,” Gensler said. “So the selling shareholders during those days don’t have some material information.”

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    PepsiCo and Beyond Meat's joint venture will reportedly launch a plant-based jerky

    Beyond Meat and PepsiCo’s joint venture is planning to launch a plant-based jerky as its first product, Bloomberg reported.
    PepsiCo CEO Ramon Laguarta said in September that the company is targeting early 2022 for the launch of the first product from the partnership.
    Beyond and Pepsi will face some competition in the vegan jerky market.

    Beyond Meat “Beyond Burger” patties made from plant-based substitutes for meat products sit on a shelf for sale in New York City.
    Angela Weiss | AFP | Getty Images

    Beyond Meat and PepsiCo’s joint venture is planning to launch a plant-based jerky as its first product, Bloomberg reported Wednesday.
    Beyond and Pepsi announced the joint venture, called The PLANeT Partnership, nearly a year ago with the goal of creating plant-based snacks and drinks together. The partnership gives Beyond, a relative newcomer to the food world, a chance to leverage Pepsi’s production and marketing expertise for new products. For its part, Pepsi can deepen its investment in plant-based categories — which are growing increasingly crowded — while working with one of the top creators of meat substitutes. It also helps Pepsi work toward its sustainability and health goals for its portfolio.

    Pepsi CEO Ramon Laguarta said in September that the company is targeting early 2022 for the launch of the first product from the partnership. Pepsi veteran Dan Moisan has been tapped as chief executive for the venture.
    A photo of the sample product published by Bloomberg showed packaging declaring that the jerky didn’t contain soy, gluten or genetically modified organisms but did contain 10 grams of plant protein per serving. Beyond and Pepsi declined to comment on the report.
    The two companies will face some competition in the vegan jerky market. Conagra Brands’ Gardein already sells it, as well as a number of smaller startups.
    Shares of Beyond were down slightly in extended trading, while Pepsi’s stock was unchanged. Beyond’s stock has slid 54% over the last 12 months as Wall Street questioned its growth prospects and supply chain issues hit sales. Pepsi’s stock, on the other hand, has risen 23% in the same time, giving it a market value of $242 billion, about 59 times that of Beyond.
    Read more about the joint venture’s plans here.

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    in Finance

    Stocks making the biggest moves midday: SoFi, Procter & Gamble, U.S. Bancorp and more

    Pampers Diapers, which are manufactured by Procter & Gamble, are displayed in an Associated Supermarket in New York.
    Ramin Talai | Bloomberg | Getty Images

    Check out the companies making headlines in midday trading.
    SoFi – Shares of the mobile financial services company surged 13.7% after the company won long-sought regulatory approval to become a bank holding company. SoFi will acquire California community lender Golden Pacific Bancorp, a deal announced last year, and operate its bank subsidiary as SoFi bank.

    UnitedHealth Group – UnitedHealth shares rose 1.4% midday, then retreated slightly to close 0.3% higher, after the health insurer’s fourth-quarter report beat earnings expectations. The company reported an adjusted profit of $4.48 per share, 17 cents above the Refinitiv consensus estimate. UnitedHealth’s revenue also topped forecasts.
    Morgan Stanley — The bank stock climbed 1.8% after the firm posted better-than-expected fourth-quarter profits on strong equities trading revenue. Unlike its rivals, which disclosed soaring compensation costs for Wall Street personnel in the quarter, Morgan Stanley kept a lid on expenses.
    Procter & Gamble – Shares of the consumer goods company rose 3.4% after it reported earnings topping Wall Street estimates. The company posted earnings of $1.66 per share, 1 cent higher than the Refinitiv consensus estimate. P&G also beat revenue expectations and raised its 2022 forecast.
    US Bancorp — Shares of U.S. Bancorp fell 7.8% after a weaker-than-expected fourth-quarter earnings report. The company posted profit below the consensus expectation from analysts surveyed by Refinitiv. Net interest income also came in lower than the StreetAccount estimate.
    State Street — Shares of the asset manager fell 7.1% despite State Street reporting better-than-expected results for the fourth quarter on the top and bottom lines. However, the company’s revenue from servicing fees came in below analysts’ expectations, according to FactSet’s StreetAccount. Additionally, State Street announced that the CEO of its Global Advisors business will retire this year.

    Sony – Sony shares fell 5% after Microsoft on Tuesday announced a deal to buy video game maker Activision Blizzard for $68.7 billion. The acquisition would increase competitive pressure on Sony’s PlayStation operation.
    Electronic Arts – Electronic Arts shares added 2.2% after an upgrade to overweight from Atlantic Equities. The firm said shares are attractive as a standalone company after Microsoft announced it would buy Activision Blizzard.
    Las Vegas Sands — The casino and gaming stock gained 1.9% on Wednesday following an upgrade to buy from neutral by UBS. The investment firm said in a note to clients that the new gambling regulations in Macao should benefit incumbents like Las Vegas Sands.
    Lennar — Shares of homebuilder stocks fell after downgrades from KeyBanc. The firm downgraded Lennar, KB Home and Toll Brothers to underweight and cut its rating on D.R. Horton to sector weight. Lennar slid 4.4%, D.R. Horton fell 3.3%, KB Home dipped 3.9% and Toll Brothers dropped 4.7%.
    — CNBC’s Tanaya Macheel, Yun Li and Jesse Pound contributed reporting

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    Biden administration announces plan to confront worsening wildfires

    The Biden administration this week unveiled a 10-year plan to spend billions of dollars to combat destructive wildfires on roughly 50 million acres of land.
    The plan targets dozens of areas in 11 Western states with treatments like thinning overgrown trees, pruning forests and conducting prescribed burns to minimize vegetation.
    Researchers say that decades of policies calling for all fires to be extinguished, rather than letting them burn in a controlled way, has caused a buildup of flammable brush.

    US President Joe Biden (C) and First Lady Jill Biden (R) tour a neighborhood destroyed by the Marshall Fire alongside Boulder County Sheriff Joe Pelle (L) in Louisville, Colorado, January 7, 2022.
    Saul Loeb | AFP | Getty Images

    The Biden administration this week unveiled a 10-year plan to spend billions of dollars to combat destructive wildfires on millions of additional acres of land and make forests more resilient to future blazes.
    The U.S. Department of Agriculture said in a statement on Tuesday that its plan, called the “wildfire crisis strategy,” targets dozens of areas in eleven Western states. The plan includes treatments such as thinning overgrown trees, pruning forests and conducting prescribed burns to minimize dead vegetation.

    The administration’s plan quadruples the government’s fuels and forest health treatments. It comes after a year during which California experienced the second-largest fire in state history and Colorado endured its most destructive fire ever that ignited unusually late in the season. 
    “We’re not going to stop fires,” U.S. Agriculture Secretary Tom Vilsack said at a press briefing in Arizona on Tuesday. “But what we can do is begin the process of reducing the catastrophic nature of those fires.”
    Hotter temperatures and more severe drought conditions fueled by climate change, along with expanding development in wildland-urban areas, have prompted more intense and prolonged wildfire seasons in the U.S. Researchers also say that decades of policies calling for all fires to be extinguished, rather than letting them burn in a controlled way, has caused a buildup of flammable brush that adds fuel to blazes.

    A firefighter saves an American flag as flames consume a home during the Dixie fire in Greenville, California on August 4, 2021.
    Josh Edelson | AFP | Getty Images

    The U.S. Forest Service previously treated up to 2 million acres in the U.S. West each year. Under the new plan, the Forest Service will work with the Department of the Interior and other partners to treat up to an additional 20 million acres on national forests and grasslands and up 30 million additional acres of other federal, state, tribal and private lands over the next decade. 
    The agency will focus its efforts on fire-prone land in Arizona, California, Colorado, Idaho, Oregon, Montana, Nevada, New Mexico, South Dakota, Utah and Washington. The plan is only partially funded so far, with $3 billion over the course of five years coming from the bipartisan infrastructure bill that was signed into law in November.

    More than 58,000 fires burned more than 7 million acres just last year, according to data by the National Centers for Environmental Information. In 2020, the worst wildfire season on record burned more than 10 million acres in the U.S.
    Fires in California, Canada and the U.S. Pacific Northwest last year emitted about 83 million tons of carbon pollution. Plumes of smoke from those blazes traveled across the Atlantic Ocean and reached large swaths of Europe.
    “We already have the tools, the knowledge and the partnerships in place to begin this work in many of our national forests and grasslands,” Forest Service Chief Randy Moore said in a statement. “Now we have funding that will allow us to build on the research and the lessons learned to address this wildfire crisis facing many of our communities.”

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    Disney taps Rebecca Campbell to head new content group as it gears up for international streaming push

    Disney has formed a new international content group to expand its pipeline of content in local and regional markets and bolster its global subscriber numbers.
    This group will be helmed by Disney streaming executive Rebecca Campbell, who will directly report to CEO Bob Chapek.
    Michael Paull will take on the newly created role of president of Disney streaming and Joe Earley will take over as head of Hulu.
    A yet to be named new head of Disney+ will take over for Paull while Russell Wolff will continue to serve as head of ESPN+.

    In this photo illustration the Disney+ logo seen displayed on a smartphone screen. Is an online video streaming subscription service owned and operated by Direct-to-Consumer & International, a subsidiary of The Walt Disney Company.
    SOPA Images | LightRocket | Getty Images

    The Walt Disney Company is looking to lure in more global subscribers to its trio of streaming services.
    On Wednesday, the entertainment giant said it had formed an international content group to expand its pipeline in local and regional markets. This group will be helmed by Disney streaming executive Rebecca Campbell, who will directly report to CEO Bob Chapek, in the newly expanded role of chairman, international content and operations.

    “Great content is what drives the success of our streaming services, and I am thrilled to have the opportunity to work even more closely with the talented creators in our international markets who are producing new stories with local relevance to delight our audiences around the globe,” Campbell said in a statement.
    While Disney has seen subscriber counts grow steadily over the last few months, the explosive adoption it saw during the pandemic has slowed. During the fiscal fourth quarter, which ended Oct. 2, 2021, Disney only added 2.1 million subscribers to Disney+, down from 12.6 million it added in the previous quarter.
    Still, when it reported these figures in November, Chapek reiterated the company’s goal of reaching 230 million to 260 million Disney+ subscribers by 2024. 
    The company revealed Wednesday that its total global subscriptions across Disney+, ESPN+ and Hulu had topped 179 million as of the end of fiscal 2021. It is unclear how that total splits among the three services.
    Disney is looking to more than double the number of countries where its Disney+ service is available by fiscal 2023. The hope is that by reaching more than 160 countries in that time frame, the company can boost its subscriber numbers high enough to reach its global goal by 2024.

    However, it won’t be able to drive significant sign-ups without offering these regions unique and catered content. Disney has already invested in the creation of original local and regional content, with more than 340 titles already in various stages of development and production.
    As part of Wednesday’s announcement, Disney promoted Michael Paull to the newly created role of president of Disney streaming. He will oversee all three of the company’s platforms globally under Kareem Daniel’s Disney Media and Entertainment Distribution division.
    Joe Earley, who previously served as the executive vice president for marking and operations for Disney+, has been tapped to take over as president of Hulu. A yet to be named new head of Disney+ will take over for Paull while Russell Wolff will continue to serve as head of ESPN+. The three streaming heads will all report directly to Paull.
    “Disney’s direct-to-consumer efforts have progressed at a tremendous pace in just a few short years, and our organization has continued to grow and evolve in support of our ambitious global streaming strategy,” Chapek said in a statement.

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    56% of Americans can't cover a $1,000 emergency expense with savings

    JGI/Jamie Grill | Tetra images | Getty Images

    Most Americans are still struggling to build solid savings accounts nearly two years into the coronavirus pandemic.
    Some 56% of Americans are unable to cover an unexpected $1,000 bill with savings, according to a telephone survey of more than 1,000 adults conducted in early January by Bankrate.

    “Emergency savings and the $1,000 threshold are really an indication of how much people are struggling, that they are that close to the edge financially,” said Greg McBride, senior vice president and chief financial analyst at Bankrate.

    Instead of drawing on their emergency savings funds, many Americans would have to go into debt to foot an unexpected $1,000 bill, either by asking family and friends for a loan, taking a personal loan from a bank or charging a credit card.
    Barriers to saving
    To be sure, the 44% of Americans who could cover a $1,000 emergency expense from their savings is the highest percentage in eight years, according to Bankrate.
    In addition, some adults fare better than others in building and keeping solid emergency savings. Nearly 60% of those with college degrees could cover a $1,000 expense, as could more than half of people who make $50,000 a year or more.
    More from Invest in You:If you are quitting a job, here are some options for health insuranceHere are the top jobs in the U.S. — and how to land themThis company just decided to give employees a 4-day workweek permanently

    Still, rising costs are also making it difficult for Americans to save. Inflation surged 7% in the last year, the fastest pace in 40 years, according to the U.S. Bureau of Labor Statistics’ December consumer price index release. Nearly all costs measured by the index increased in December, with the prices of shelter, used cars and trucks, energy and food boosting the measure most.
    Nearly half of Americans said that higher costs are keeping them from saving more, according to Bankrate.
    “Just about every expense to run a household has gone up,” said Tania Brown, a Lawrenceville, Georgia-based certified financial planner and founder of FinanciallyConfidentMom.com. In addition, she added that parents may be especially struggling if their children are in and out of school due to Covid, which not only impacts budgets but how much some can work each week.
    How to build savings this year
    For people who want to continue saving or start working on building an emergency fund now, it likely means they’ll need some creative budgeting, Brown said.
    “To me, the biggest contributing factor in finances is behavior,” she said, adding that if you can make shifts to your spending habits, it will help you save.
    That may mean making cuts to cable and streaming platform subscriptions or deciding to buy less meat at the grocery store, in order to save money. People could also sell clothes they’re no longer planning to wear and make changes to their homes to save on energy bills.

    It may also be time for people to diligently shop for deals and start using coupons to keep costs down, or even commit to a no-spend period, Brown explained.
    “For the stuff that’s not that important, cut mercilessly,” she said.
    Once you’ve made cuts, you should also be intentional about where that extra money is going. Make sure you’re sending every found dollar to an emergency savings fund or to pay down debt, Brown said.
    “Your lifestyle can’t creep up with the changes,” she said. “There has to be almost an obsession, a compulsion with prioritizing savings and serious intentionality on where you spend money.”
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    Disclosure: NBCUniversal and Comcast Ventures are investors in Acorns. More

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    Peloton insiders sold nearly $500 million in stock before its big drop, SEC filings show

    Peloton executives and insiders sold nearly $500 million worth of their stock before its big decline, according to SEC filings.
    Much of the selling started when shares surged past $80 in the fall of 2020. The sales gained momentum in 2021 as the stock held above $100.
    John Foley, the CEO and co-founder, sold $119 million worth of stock starting in November 2020, according to SmartInsider. Others included the president William Lynch and Hisao Kushi, co-founder and chief legal and culture officer.

    Peloton executives and insiders sold nearly $500 million worth of their stock before its big decline, according to filings with the Securities and Exchange Commission.
    Peloton stock is down more than 80% from its highs last year, and it hit a 52-week low of $29.11 on Tuesday. Yet the company’s CEO and other executives sold millions of shares at prices over $100 a share in the months leading up to the big declines.

    Company executives and insiders sold $496 million worth of their shares in 2021, according to SmartInsider, citing SEC filings. Virtually all of the sales were part of 10b5-1 plans, or prescheduled selling programs. It’s unclear how many of the sales were also linked to options exercises or options-related tax sales.
    The big selling started when the stock started surging past $80 a share in the fall of 2020, and gained momentum in 2021 as the stock held above $100, the filings show.
    The company didn’t respond to requests for comment.
    Peloton shares soared as sales and subscribers grew during the first year of the coronavirus pandemic. Consumers flocked to the product as they looked for ways to break a sweat without a gym membership. To meet the strong demand, Peloton invested in its business, scurrying to ramp up manufacturing and expedite order fulfillment. But as Covid vaccines rolled out, the company saw demand weaken and its stock began to sink.
    John Foley, the company’s CEO and co-founder, sold $119 million worth of stock starting in November 2020, according to SmartInsider. Most of his sales were for $110 a share or higher. The sales were part of a prearranged 10b5-1 plan to “sell a limited amount of the company’s shares for personal financial management purposes,” according to a SEC filing.

    Although the plan called for selling up to 2.4 million shares through October 2022, Foley notified the board that he had terminated the selling plan on Aug. 30, 2021, after selling a total of 1 million shares. No reason was given for the termination, but on Nov. 4, 2021, the company slashed its sales forecast and the shares tumbled.
    The stock sales represented about 16% of Foley’s total stake in the company, excluding options. Including options, the sale equaled about 5% of his holdings, according to SmartInsider.
    Many top executives also cashed out a portion of their holdings with well-timed sales. William Lynch, the company president, sold more than $105 million in shares last year, with $72 million sold in February at an average price of $144.95.

    John Foley, co-founder and chief executive officer of Peloton Interactive Inc., center, speaks as Hisao Kushi, co-founder and chief legal officer of Peloton Interactive Inc., from left, Tom Cortese, co-founder and chief operating officer of Peloton Interactive Inc., Yony Feng, co-founder and chief technology officer of Peloton Interactive Inc., and Graham Stanton, co-founder of Peloton Interactive Inc., listen during the company’s initial public offering (IPO) at the Nasdaq MarketSite in New York, U.S., on Thursday, Sept. 26, 2019.
    Michael Nagle | Bloomberg | Getty Images

    Hisao Kushi, co-founder and chief legal and culture officer, sold more than $90 million of his shares — most at prices above $110 a share. Other big sellers included the company’s chief product officer, Tom Cortese, who sold more than $60 million of his stock, and Mariana Garavaglia, chief operating officer, who tallied more than $25 million in sales.
    Members of the board have also cashed out their holdings, including Karen Boone, who sold more than $20 million in stock last February at prices above $140 a share, according to filings.
    To be sure, Peloton insiders weren’t the only ones selling the stock during last year’s runup. With large stock sales from prominent executives such as Jeff Bezos and Elon Musk, total insider selling reached a record $170 billion last year, up from $94 billion in 2020, according to SmartInsider. Historically, corporate executives and insiders sell during or near highs in their stock price.
    “One of the most well-accepted facts from decades of research on insider trading is that corporate insiders buy near bottoms and sell near peaks,” said Daniel Taylor, an associate professor at the Wharton School.
    At the moment, Peloton is flirting with new lows. The stock came very close to going below its $29 a share IPO price, after CNBC reported that the company had hired McKinsey as it reviews its cost structure, an effort that could result in job cuts and store closures. Peloton also is effectively raising product prices later this month, when it begins to charge for shipping and installation.

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    Biden will make 400 million N95 masks available to Americans for free

    The Biden administration will make 400 million highly protective N95 masks available to Americans for free.
    People can pick up the masks at thousands of pharmacies and community health centers.
    The masks will start to become available next week and the program will be fully up and running by early February.

    Workers produce N95 respirators at Protective Health Gear (PHG) in Paterson, New Jersey, U.S., January 14, 2022.
    Brendan McDermid | Reuters

    President Joe Biden will make 400 million highly protective N95 masks available to Americans for free at pharmacies and community health centers around the U.S., a White House official said.
    The masks will start to become available late next week, and the program will be fully up and running by early February, according to the official. The White House said the free masks are the largest deployment of personal protective equipment in U.S. history.

    The Centers for Disease Control and Prevention, in updated guidance published last week, said N95 respirators are more effective at preventing transmission of the virus than cloth and surgical masks. However, CDC Director Dr. Rochelle Walensky has said wearing any mask is better than no mask.

    CNBC Health & Science

    The CDC said N95 masks must form a seal on the face to work properly, warning that gaps can let respiratory droplets that carry virus particles in and out of the mask. The agency provided a fact sheet to demonstrate how N95s should be worn.
    The CDC recommends that everyone 2 years of age or older wear masks in indoor public spaces regardless of vaccination status in areas with substantial or high levels of viral transmission. Right now, virtually every county in the U.S. has high transmission of the virus, according to the agency.
    People are required by federal law to wear masks on planes, buses, trains and other forms of public transportation.
    Democrats in Congress have pushed the Biden administration to provide N95 masks to Americans for free as the highly contagious Covid omicron variant has swept the country, causing unprecedented levels of infection. Sen. Bernie Sanders, I-Vt., reintroduced legislation last week to deliver three N95 masks to every person in the U.S. The legislation has 50 co-sponsors in the House and Senate.

    “Congress must demand the mass production and distribution of N95 masks, one of the most effective ways to stop the spread of the Covid virus,” Sanders said in a statement.
    Researchers in Australia found that fabric masks are least 50% effective at filtering virus particles, while N95 and surgical masks are about 99% effective. The study was published in the peer-reviewed journal Pathogens in September 2020.
    The Biden administration is also distributing free at-home Covid tests to American households. Every home can order four Covid tests at www.covidtests.gov.

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